I just spoke with an ex sega employee about it. This is what he said: they talked internally about sonic, but didn’t have the greatest relationship with corporate. They also didn’t know if it would be a strong title. Back then there was no home sales and 75% export and you couldn’t pay to place a game in Japan. There was a stigma associated with cartoon characters after the Popeye and Bugs Bunny flops. They even had to convince Gary to do space jam and only made it because they worked with Michael Jordan. Simpson’s only got made because it was an “adult” cartoon. So yes, it was discussed but just never happened